What If?
May 15, 2012

Two current factors do not auger well for military planners: the economic crisis faced by all Western governments, and the perceived lessons from military excursions into Iraq and Afghanistan.

In the first case, nations have become painfully aware that they have overspent their fiscal resources to meet social objectives which should have been, by right, self-sustaining.

As for the second factor, a belief that future warfare will likely take the shape of counter-insurgency operations such as those seen in Iraq and Afghanistan will figure in many government’s planned programs of austerity. Hence, having made this assumption, they will argue against maintaining either military personnel or equipment at previous levels of preparedness. This same flawed thinking has always followed military operations. However, we must consider the “realpolitik” that faces us now and into the long term.

Despite the desire of many political factions to seek an immediate reduction in defence spending, we would do well to remember that such short-sightedness has created significant “downstream” problems in the past. Every major conflict that we faced in the 20th Century has had a major economic and political impact on this country. Both World Wars, as well as Korea and the Cold War, have proven that the ensuing reduction in military preparedness has resulted in economic strain when new requirements emerged. To make matters worse, the lack of preparedness caused the unwanted and unwarranted waste of critical fiscal resources until a properly supervised management system was put into place. As illustrated by the current problems with the F-35 file, Public Works has demonstrated the need for a separate, accountable and competent agency to provide the necessary resources to meet our military needs. Facing the “Realpolitik” of the ­current world, it would seem to be more prudent to have a well equipped and ­moderately sized military force that is capable of projecting a meaningful military power when required.

The balance of power established through the Mutually Assured Destruction (MAD) doctrine of the 1960s through to the 1980s is no longer in force.

Rather than a bipolar power dynamic, the world now faces a multi-power dynamic. Thus, instead of two major protagonists with nuclear weapons, we face a proliferation of nuclear weapons, which could present any number of possible scenarios for nuclear conflict. More worrisome is the fact the “Nuclear Club” now includes missiles and nuclear weapons that have been developed by so-called “Rogue” nations. The implications of that are clear.

This new “reality” has clouded the relative stability of the previous entente that had developed over time between the two major superpowers – which makes maintaining world peace much more tenuous.

What are we to make of all this? Well, for the foreseeable future, there will be little appetite for expensive programs that depend on uncertain technology. The days of nations supporting “money pits” for unproven military technologies are over. That being said, the military must continue to adapt to the unstable environments of today. Planners must develop contingency plans to ensure a back-up course of action. Project and fiscal planning documentation must answer questions such as: “What if this project fails to deliver the goods and services within the terms of the contract? Or, what if the project experiences major slippages? What can be done to mitigate the risks of under-spending? The new reality of tight money demands less waste and alternate expenditure plans to deal with project delay or material delivery slippage.

Examples of a Lack of Contingency Planning
Despite claims by defence contractors that they can produce within projected time frames, experience suggests that this is often not the case. To be sure, many projects and programs are functioning well but these tend to be lesser in nature and less costly. There have been a string of project cancellations (such as the British TR2 Bomber, the U.S. Multirole Combat Aircraft; the RCN Hydrofoil, and a host of other electronic projects) by many military forces for failure to produce satisfactory results within the given time frame or when costs rise too much. Yet, by remaining blind to other opportunities, we do not take advantage of an increasing array of options to equip the Canadian military with modern and effective equipment that is required to do the job demanded of them.

So where does a refocus leave Canada and its defence program? There are several issues to consider here.

What if the F-35 Lightening II JSF Project is cancelled?
While Canada has been a significant long term proponent of the F35 Lightening II Joint Strike Fighter, the government of the day participated in funding development because of the promise of a lower cost price and the promise of Canadian aerospace companies participating in the construction of key components and systems. However, many Aerospace pundits believe that the U.S. government is fast approaching a “go/no go” decision point.

The extreme pressures to significantly reduce defence procurement funding could see the program cut, downsized or rescoped to produce a somewhat less capable Fifth Generation Aircraft using proven technology. Most pundits believe the JSF project will not escape the “scrub down” unscathed (like the F22 project before it), thus leaving Canada’s plan to re-equip our fighter component with the JSF in the dust with no alternative replacement in sight.

Secondly, frame-specific costs aside, the “bulk” costs of the F-35s that are being delivered to the USAF, USN and Marine Corps as part of the initial low production run have far exceeded the costs that the Canadian government intends to pay. In fact, the U.S. Government will pay two and a half times the Canadian cost for these aircraft. While other countries have indicated a willingness to purchase the fighter, most are considering following Australia’s lead in purchasing new, more modern “Heritage” fighters such as the “Super Hornet” as an “interim” expedient aircraft. The Australian government noted with the purchase that the USN intends to continue to fly their “Super Hornet” until at least 2050, which guarantees value for money currently and in the future should the JSF program fail or be downsized. Other nations are beginning to consider a similar purchase of later models of their own “Heritage” equipment or purchasing product-improved versions for their own forces. It has been rumoured for some time that the British MOD will not allow their two new carriers to be tied up because of JSF problems. The British Navy is said to have come to the conclusion that “a bird in the hand” is worth more for operations than the proverbial “two in the bush.” International aerospace industry analysts are simply saying that if Lockheed Martin continues to delay their program, for whatever reason, they can expect an egress of their current partners as nations turn to other suppliers to meet their various needs. Canada should pay heed to developments in other Air Forces as well as the current marketplace information.

Notwithstanding the above-cited problems, Canada will still require a program to replace its rapidly aging fleet in the very near term. That fact is unassailable. What is not immediately evident in Canadian defence planning is any semblance of an alternative to the consequences of project cancellation, downsizing or reclassification.

The “what if” question should have been asked some time ago! As for any other critical requirement project, military and government agencies must consider the consequences of contract failure and should have a reasonable set of viable alternative plans that can be set into place quickly to avoid repeating previous mistakes.

Compensation and Consequence of “What if” Failure Planning
The costs of development and production are quickly becoming (or are) increasingly beyond the reach of most countries, and they are turning away from the large military weapons and system producers. The winners created by this excessive cost problem are turning out to be the “second tier” of aircraft producers. Companies like Saab of Sweden, Dassault of France and Alenia of Italy are aggressively marketing their products to the world and finding willing buyers. With the International Monetary Crisis faced by all nations, most are not willing or able to expend excessive funds to procure advanced military equipment. They have judged that they can achieve qualitative results in their projected battle-spaces with the equipment offered by these so-called “second tier” suppliers or to purchase up-dated or refurbished “Heritage” equipment from “first tier” suppliers or as surplus equipment.

Again, what is missing in Canadian defence planning is a method or alternative program to militate against this potential failure to provide the required equipment on time and target. Contingency planning designed to circumvent these problems is not getting the priority it should. If a capital project is forced to foot fundamental design experimentation and manufacture costs for military equipment for which there is no suitable alternative manufacturer available, then the government and the military should claim a portion of the profits of future sales to recompense the unforecasted expenditures needed to sustain the project.

Once more we can see that failure to provide coherent contingency planning for unforeseen problems and the development of an alternative strategy cripples the ability of the military to discharge its mandated tasks by forcing it to spend significant funds in keeping obsolete and worn out equipment operational. While the Canadian Forces can carry up to 2% of Capital Funds to the next subsequent fiscal year, it is time to consider allowing the Department and the Canadian Forces to “protect” those funds for up to five years. Other nations have mechanisms to protect program funding, it makes fiscal sense.

What if We Fail to Expend Allocated Fiscal Resources?
As highlighted by Ken Pole’s “Unspent Funds” article (Issue#1, FrontLine 2012), military procurement has acquired the unenviable reputation of being unable to spend their allocated funds. There is no shortage of reasons why this is so. Much of this under-spending can be laid at the doorstep of an arcane project management structure that project staffs are forced to endure. Secondly, there are and have been in the past instances of political interference to ensure project outcomes that have no connection to defence policy. It has been suggested that when significant project ­surplus money cannot be spent, the government should have a list of pre-approved projects that can be quickly put into force and could be used to reduce downstream project costs. For example, a vigilant supply manager should be able to use about-to-be-lapsed funds to pre-purchase materials and specialist items in one fiscal year until required later for a particular project. However, if the department cannot avoid failing to take advantage of economical sales, supplies or services, the ability to “park” capital funds for a period of three to five fiscal years would reduce the current practice of spending funds on the acquisition of non-operational equipment and systems.

Again the absence of alternative planning is notable. It was often an individual action that saved scarce military project funds. I am not suggesting that we undertake to join in the fiscal year-end spending frenzy that has produced some products that were long on cost but short on utility. What I am saying is that there are opportunities to acquire equipment that will address some of the major doctrinal shortfalls that have plagued the Canadian military for years. It should be a simple matter to pre-negotiate price and availability with agreements in place to access sources to acquire the desired capability.

How would this work? Many nations are currently disposing of surplus military stocks. Despite the fact that the threat of major conflict had lessened since the Cold War, these nations took delivery of equipment that had been contracted some years earlier. The current fiscal downturn has created a need for some countries to turn these assets into fiscal resources. Much of the equipment for purchase neatly fits into Canadian military doctrine. It is a significant opportunity to address much of its current equipment shortfalls by purchasing this equipment at reduced costs. Other alternatives such as Russian aerospace products should also be explored and considered. What if Canada was to take advantage of any of these options?

Despite the current difficulties with our recent purchase of “used” submarines, Canada still needs to pay attention to all of the opportunities to purchase new or surplus equipment from our Allies. Most of our allied forces would be more than happy to allow the Canadian military to acquire proven common-use equipment we need from their surplus stocks. Of course, we’d have to revisit our penchant for ‘Canadianizing’ platforms to the point that it would be cheaper to procure new, but that’s another matter. The acquisition of a significant number of modern weapon systems that were mothballed because of budgetary requirements items would go a long way to allowing our forces to become much more effective and capable at manageable costs. We have already purchased a number of ­surplus vehicles such as Leopard II tanks – which, even after the minor modifications requested, were a reasonable price.

Contingency planning could allow quick acquisition of many long-standing but unfunded projects for expensive and long lead items such as tank transporters, bridge layers and other support systems needed for our current holdings.

Much can be achieved through better planning and the development of feasible and affordable contingency planning. Exploring government to government procurement options and planning accordingly for fast action opportunity procurement is not only prudent but also the only viable method currently available to avoid lapsing funds or ill-considered year-end procurement.

It is obvious that we’ve had to needlessly return funds to Treasury Board due to a lack of contingency planning to deal with unexpended funds. There is enough blame to go around for this lack of foresight to be sure – and it is not all the politicians fault! A large portion can be laid directly at the feet of major defence contractors for over-selling their product, and their propensity to deny culpability for failure to meet project milestones. The government of Canada is also responsible for failing to hold the Contractor’s “feet to the fire” to ensure contract compliance and the prompt delivery of the required equipment or service. Many government departments and agencies have been complacent for too long and fail to carry out “due diligence” on portions of the agreements that they are responsible for. It is even the fault of military project staffs that are afraid to “bell the cat” for fear of punition as the bearer of bad news.

Military planners are also at fault for attempting to cram so many new ­capabilities into supposedly off-the-shelf procurements. They repeatedly turn an OTS requirement into a highly customized ­platform – driving up the costs and delaying delivery. Canada’s submarines are a fine example of this.

But the major failure is that, even though we are aware of these repetitive issues, we have failed as a nation and a military to plan to mitigate the effects of such delays. Pre-negotiation by the military with both the PWGSC and Treasury Board, based on a cabinet approved mandate to procure “fast hit” material goods and services though the use of preapproved Standing Offers and MOU’s with both ­suppliers and foreign governments, could have avoided any irresponsible loss of defence funding.

It is evident that we need to plan more thoroughly than we have ever done in the past. We must conduct effective contingency planning to enable and facilitate pre-approved project activation in a timely manner. Only then can we maximize the “Bang for the Buck” goal we continually seek, and avoid the bureaucratic annual fiscal year end ritual.

Rob Day is a military historian and FrontLine analyst.
© FrontLine Defence 2012